Atlanta-based the Ritz-Carlton Co. will open two new properties in Colorado, marking a return to the Rockies after a three-year hiatus. Construction is nearing completion on the 73-unit Ritz-Carlton Club in Aspen, an ownership resort scheduled to open in February. The hotel company also is planning a bigger project in Bachelor Gulch near Vail. The $162-million, 230-room Ritz-Carlton Bachelor Gulch is a joint venture between Ritz-Carlton and Vail Resorts.
Company officials say Ritz-Carlton is glad to be back in Colorado, since it is one of the country's biggest resort destinations. Three years ago, Ritz-Carlton took its name off its only resort in Colorado, the Aspen Ritz Carlton, because the hotel's owners didn't meet the company's strict management requirements.
Prosperous New Year predicted for hotel industry All signs point to a profitable New Year in the hotel industry, according to the "Hotel Real Estate Second Quarter 2000 Report," written by Portsmouth, N.H.-based Lodging Econometrics. The number of hotels under development in the United States is on the decline and limited financing options are restricting new construction.
These trends are "terrific news" for the industry, the report states. Since the number of hotel rooms in the active development pipeline - hotels either under construction or in permitting - continues to fall, there is less of a chance of oversupply, according to the report. In 1998, new hotel openings reached a record of 149,597 rooms, which sparked concern that the industry was growing too fast and that demand would outstrip supply. That scenario could have resulted in an industry-wide decline in revenues per available room (RevPAR).
However, the total number of rooms under construction has dropped steadily since 1998, according to the report. The total active pipeline at the end of the second quarter was 268,076 rooms, down 26.7% from the third-quarter peak in 1998. That figure also represents a 6.2% decline from the first quarter total of 285,930 rooms.
"Supply declines, a necessary element for a successful soft landing, have been gradual until now," the report states. "The soft landing is on track but may prove to be even softer than envisioned, as the construction schedule that began in the mid-1990s shows signs of slowing down at a faster pace."
As of the second quarter, the "Big Three" hotel companies - Bethesda, Md.-based Marriott International Inc., Beverly Hills, Calif.-based Hilton Hotels Corp. and Atlanta-based Bass Hotels & Resorts - were responsible for almost half of the projects in the active pipeline. Marriott had 20.7% (55,397 rooms) of the active projects, Hilton 15.2% (40,766 rooms) and Bass 9.6% (25,709 rooms).
Among the study's other findings: - The total number of new hotel openings is expected to be between 125,000 rooms and 129,000 rooms this year.
- The mid-market, limited-service, economy and budget segments experienced the greatest decline in new openings from the first quarter to the second quarter. Smaller developers that typically build these hotels have fewer options for capital and have largely stepped to the sidelines.
- Projects in the early planning stage are on the rise, totaling 1,374 in the second quarter. Factors contributing to the increase include optimism generated by the perceived success of the Federal Reserve's economic policies, strong first-half operating results and the belief that interest rates will not increase in the immediate future. However, this increase in projects in the early planning stages may not result in a corresponding jump in new con- struction because the failure rate of these projects is often as high as 60%.
- RevPAR increases in the first half of the year reached the highest levels in the last three years. Due to strong revenues, many lodging companies reported earnings above Wall Street estimates and several REITs hit 52-week high stock-price increases.
- Seattle and Philadelphia face oversupply problems. Seattle's active pipeline is 16.8% of existing supply, while Philadelphia's is 10.5%, factors that are expected to lower occupancy levels and adversely affect revenues.